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Posted February 25, 2026 at 10:00 am
This video breaks down why the U.S. dollar weakened against most major developed currencies in 2025 and what factors could shape the EUR/USD pair heading into 2026. We start with the two forces that drove the dollar lower. Growing expectations for aggressive Fed rate cuts relative to global central banks, and the unwinding of a crowded positioning trade that was long the U.S. and short Europe. You’ll see how U.S. and German two-year yields broke their typical correlation, with American yields falling while European yields rose, and why that divergence became a signal for currency traders. From there, we look at the euro’s 15% surge against the dollar between March 2025 and late January 2026. We then turn to what could matter most in 2026, including the expected appointment of Kevin Warsh as the new Federal Reserve chairman and the question of whether monetary policy will stay accommodative under political pressure. Finally, we examine the other side of the trade. With the euro near a five-year high, we explore whether the bullish thesis may already be reflected in the price and what a corrective phase might look like.
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Originally Posted February 24, 2026
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.
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